SAP Admits Liability in Oracle Software Piracy Case

Only four days before SAP and Oracle were to meet in an Oakland courtroom concerning a case brought by Oracle against SAP over copyright infringements, SAP has admitted contributory liability. The latest filing is a dramatic change from its previous position where it admitted wrongdoing by its subsidiary, TomorrowNow, but not by SAP itself.

By admitting contributory liability, SAP is effectively admitting that it knew of or it contributed to TomorrowNow’s actions in pirating Oracle (news, site) software.

With this news, the amount of compensation awarded by a jury could be considerably more than the US$ 40 million that SAP (news, site) has been hoping for. Whether the compensation will be the billions Oracle is looking for however, remains to be seen.

In any case, it now looks like the trial will not go ahead until late next week, after Oracle asked that it be pushed forward a few days following SAP’s eleventh-hour change of heart.

SAP and TomorrowNow

The case stems from the 2005 acquisition of the now-defunct Texas-based company TomorrowNow, which provided software customer support and maintenance cheaper than the companies that made the software.

Although it only ever attracted a few hundred customers, it serviced software provided by SAP, PeopleSoft and JD Edwards and was originally meant to be a key plank in SAP’s attempts to attract PeopleSoft customers after Oracle bought the company around the same time.

The idea was to offer PeopleSoft maintenance to those customers that would jump ship and go with SAP rather than Oracle. However, that didn’t really play out as Oracle changed its mind after the acquisition and agreed to provide future generations of PeopleSoft products.

The copyright infringement stems from the illegal downloading of Oracle documentation from its customer-support systems to carry out its servicing.

SAP and Oracle

SAP management has always denied that it knew of TomorrowNow’s illegal activities. However, Oracle says differently. In a statement issued yesterday Oracle said:

SAP management has insisted for three and a half years of litigation that it knew nothing about SAP's own massive theft of Oracle's intellectual property. Today, SAP has finally confessed it knew about the theft all along. The evidence at trial will show that the SAP Board of Directors valued Oracle's copyrighted software so highly, they were willing to steal it rather than compete fairly."

SAP says it made the filing to shorten the length of the trial and in a letter to the court said that it wished to clear up the matter of liability as it would have no bearing on the amount of damages. Keeping it in play, SAP said, it would only pander to Oracle’s desire of turning the trial into a “sideshow."

SAP, Oracle and HP

And the real issue? Oracle was widely expected to call Leo Apotheker, then CEO of SAP as a witness. Ironically, Amotheker is due to start as CEO of HP on Monday, the same day the trial is due to start.

Apothekar was named as the new CEO of HP last month after quitting SAP in February. He will be replacing Mark Hurd -- now Oracle president -- after Hurd left HP under a cloud in August.

An added twist is that just as HP appointed Apothekar, it also appointed Ray Lane as chairman, having previously served as an executive under Larry Ellison until 2000.

Ellison insists that Apothekar knew about the downloads, while HP insists he didn’t. For many, Ellison’s claims are geared at embarrassing HP and preventing a smooth takeover by Apothekar, as well as providing weeks of harassment towards the competitor.